The British pound sterling is showing signs of recovery, recovering from a five-month low and stabilizing around the 1.2470 level on Thursday. This rebound is attributed to the release of UK inflation data, suggesting a possible easing of monetary policy by the Bank of England (BoE).
The UK consumer price index (CPI) slowed to 3.2% year-on-year in March, down from 3.4% in February, marking the lowest inflation rate in two and a half years. This slowdown has increased investor optimism about a possible policy easing by the Bank of England, particularly as core inflation has also fallen to its lowest level since mid-2021. However, persistent inflation in the service sector may lead to cautious deliberation among certain members of the monetary committee.
Meanwhile, representatives of the US Federal Reserve have reiterated that US interest rates are likely to remain high for an extended period. On the other hand, the Bank of England is perceived to be relatively stable and could begin to ease its monetary policy in the summer.
The first quarter saw significant pressures coming from the tight labor market and shocks from rising energy prices, which initially suggested the Bank of England could follow the European Central Bank (ECB) and the Federal Reserve in cutting rates. of interest. However, market conditions have changed considerably. Currency analysts now anticipate that the ECB could cut interest rates in June, the Bank of England in September and the Federal Reserve only in the fourth quarter.
GBP/USD Technical Analysis
The GBP/USD H4 chart indicates that after forming a consolidation range around 1.2547, the pair reached the target of 1.2450 with a downward exit. A new consolidation range is currently forming above this level. A break below this range may see prices decline to 1.2380, with a subsequent correction to retest 1.2547 (testing from below) before a possible continuation to 1.2200. This bearish scenario is supported by the MACD oscillator, whose signal line is below zero and is in a bearish trend.
On the H1 chart, GBP/USD has completed a decline to 1.2406 and is currently undergoing a correction to 1.2491. After this correction, a further fall to 1.2381 is anticipated. The stochastic oscillator, currently above 80, is poised for a sharp decline to the 20 mark, reinforcing the likelihood of further downward movement in the near term.
By RoboForex Analysis Department
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
